Holding

The Court held that, in view of the definition of “brand name” in Explanation IX of Notification 1193‑CE, the eligibility of Hira Cement for SSI exemption must be reconsidered afresh by the Tribunal, and the appeal is allowed.

Summary

The Commissioner of Central Excise appealed against the Customs, Excise & Service Tax Appellate Tribunal’s dismissal of his appeal challenging the exemption granted to M/s Hira Cement, a small‑scale industry (SSI), under Notification No.1193‑CE dated 28‑Feb‑1993. The issue was whether Hira Cement’s use of the brand name of another cement manufacturer, Hira Industries Ltd., disqualified it from the SSI exemption, and whether the Tribunal’s earlier decision in Emkay Investment (later overruled by this Court) was binding. The Court observed that the criteria for SSI exemption are to be construed strictly and that the definition of “brand name” in Explanation IX requires fresh factual consideration by the Tribunal. It held that the earlier Tribunal decision could not be applied and that the matter must be remitted for a fresh determination. Consequently, the appeal was allowed, the impugned judgment set aside, and the case sent back to the Tribunal.

Issues considered

Whether the use of another person's brand name by an SSI disqualifies it from exemption under Notification No.1193‑CE.
Whether the Tribunal's decision in Emkay Investment, later overruled, is binding on the present case.
Whether the appeal is maintainable after the Commissioner’s earlier order attained finality.
Interpretation of the term “brand name” as defined in Explanation IX of the exemption notification.

Legislation cited

Central Excise Act, 1944s. 35L(b), s. 4, s. SA
Companies Acts. 6

Subjects

Central ExciseSmall Scale Industry exemptionBrand name definitionNotification 1193‑CETribunal reviewSection 35L(b)Related personsEmkay Investment caseRes judicata

Judgment

'(

COMMISSIONER OF CENTRAL EXCISE, RAIPUR A
• v.
M/S. HJRA CEMENT

FEBRUARY 2, 2006

(S.B. SINHA AND P.K. BALASUBRAMANYAN, JJ.] B

Central Excises and Salt Act, 1944 :

Exemption Notification No.1193-CE dated 28.2.93-SSI Exemption
claimed by assessee-Department denying same on the ground that assessee C
ajf1Xing brand name of another unit on its product-Held: Having regard to
the definition of the brand name as contained in Explanation IX to the
notification dated 28.2.1993, the matter requires fresh consideration by the
Tribunal upon taking into consideration the fact of the matter.

Respondent-assessee has been engaged in the manufacture of cement.
D
It had"been claiming benefit ofSSI exemption under Notification No.1193-CE
dated 28.2.1993. Show cause Notices were issued by Department to the
assessee proposing to disallow the SSI Exemption and to recover duty not paid
on the ground that assessee was clearing goods manufactured by it bearing
. the brand name of another unit. In the proceedings, assessee was held to be E
not entitled to such exemption. On appeal, Commissioner dropped the
proceedings.

Department unsuccessfully filed appeal before the Tribunal. Hence the
present appeal.
F
Allowing the appeal and remitting the matter to Tribunal, the Court

HELD: 1. The purport and object of grant of exemption to a SSI unit is
clear and unambiguous. It can be availed of, provided that they satisfy the
conditions precedent therefor. The criteria for determining the eligibility of
an entrepreneur for becoming entitled to have the benefit of exemption G
notification, must be construed strictly. [1084-E]

Tata Iron and Steel Co. Ltd. v. State of Jharkhand and Ors., [2005] 4
SCC 272 and Government of India & Ors. v. Indian Tobacco Association,

1077 H
1078 SUPREME COURT REPORTS [2006] I S.C.R.

A (2005) 6 SCALE 683, relied on.

Commissioner of C. Ex., Trichy v. Rukmani Pakkwell Traders, (2004)
165 ELT 481 : [2004[ ll SCC 801 and Commissioner of Central Excise,
Chandigarh-Iv. Mahaan Du1ries. (2004) 166 EL T 23, referred to.

B Emkay Investment Pvt. ltd. v. Commissioner, (2000) 124 ELT 741,
overruled.

2. Having regard to the definition of the brand name as contained in
Explanation IX to the notification dated 28.2.1993, the matter requires fresh
consideration by the Tribunal upon taking into consideration the fact of the
C matter. If, however, the Tribunal comes to the conclusion or is of the opinion
that further investigation in facts may be necessary, it may pass such order
or orders as it may think fit and proper. [1086-EJ

Government of WB. v. Tarun K. Roy and Ors., [2004) I SCC 347, relied
D on.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4424 of2004.

From the Final Order No. 145/2004-B dated 22.1.2004 of the Customs,
Excise and Service Tax Appellate Tribunal, New Delhi in Appeal No. E/682/
E 03-NB(B).

G.E. Vahanvati and S.G. P. Parmeswaran for the Appellant.

R. Santhanan, Rajendra Singhvi and Ashok Kumar Singh for the
Respondents.

F The Judgment of the Court was delivered by

S.B. SINHA, J. 'This appeal under Section 35L(b) of the Central Excise
Act, 1944 (for short "the Act") is directed against a final judgment and order
dated 22. l.2004 passed by the Customs, Excise & Service Tax Appellate
G Tribunal, New Delhi in Appeal No. 145/2004-B whereby and whereunder the
appeal preferred by the Appellant herein was dismissed.

The basic fact of the matter is not in dispute. The assessee is one
Mis. H ira Cement. It carries on business of manufacture of cement in the town
of Raipur. It is a small-scale industry (SSI) being a proprietory concern of one
H Shri Suresh Agrawal. Another industry, known as Mis. Hira Industries Limited,
COMMR OF CENTRAL EXCISE, RAIPUR 1·. HIRA CEMENT [SINHA, J.) ) 079

is also a manufacturer of cement having a factory in the town of Jagdalpur A
which is situated at a distance of aLout 300 kms. from Raipur. Hira Industries
Limited was incorporated and registered under the Companies Act on or
about 20th October, 1983 whereas the Res?ondent herein was set up in the
year 1988. Hira Industries Limited is not a SS! unit. The unit of the Respondent
was earlier known as Bajrang Bali Cement whereas that of Hira Industries B
Limited was known as Jai Bajrang Cement Ltd. The capacity of production of
the Respondent's cement industry is about 60 tonnes per day whereas that
of Hira Industries Limited is 150 tonnes per day.

As a SS! unit, the Respondent herein claimed exemption from payment
of excise duty in tenns of a notification dated 28.2.1993. The said notification C
was issued under Section SA of the Act; paragraph 4 whereof reads as under:

"4. The exemption contained in this notification shall not apply to the
specified goods where a manufacturer affixes the specified goods with
a brand name or trade name (registered or not) of another person who
is not eligible for the grant of exemption under this notification: D
Provided that nothing contained in this paragraph shall be applicable
to the specified goods which are component parts of any machinery
or equipment or appliances and cleared from a factory for use as
original equipment in the manufacture of the said machinery or
equipment or appliances and the procedure set up out in Chapter X E
of the said Rules is followed:

Provided further that nothing contained in this paragraph shall be
applicable to the specified goods where a manufacturer affixes the
specified goods with a brand name or trade name (registered or not)
of the Khadi and Village Industries Commission or of the State Khadi F
and Village Industries Board."

"Brand name" or "trade name" has been defined in Explanation IX of
the said notification in the following terms :

"Brand name" or "trade name" shall mean a brand name or trade name, G
whether registered or not, that is to say a name or a mark, such as
symbol, monogram, label, signature or invented word or writing which
is used in relation to such specified goods for the purpose of indicating,
or so as to indicate a connection in the course of trade between such
specified goods and some person using such name or mark with or
without any indication of the identify of that person." H
1080 SUPREME COURT REPORTS [2006[ I S.C.R.

A The Respondent herein states :

"Hira Industries Ltd. is thus a Limited company run by Shri B.L.
Agrawal and other Directors whereas Hira Cement is a proprietorship
concern owned by Shri Suresh Agrawal. Shri Suresh is the nephew
of Shri B.L. Agrawal and that was the main reason for which both the
B units were held to be related pal1ies. However, there is no other nexus
or relation between Hira Industries Ltd. and Hira Cement. Shri B.L.
Agrawal and Shri Suresh Agrawal are not even falls within the ambit
of definition of Relatives as defined under Section 6 of the companies
Act, read with Schedule I A of the Act.

C The Hira Industries Ltd. has hired a portion of premises of Hira
Cement for maintaining its Registered Office at Raipur and a small
godown for keeping its goods. Hira Industries Ltd. used to purchase
Cement from Hira Cement and for catering to the needs of its Raipur
customers Hira Industries Ltd. used to keep those goods in the said
D godown. Accordingly, the Registered Office and Telephone Numbers
of Hira Industries Ltd. and Office Address and Telephone Numbers
of Hira Cement happened to be the same. Both the entities were
operating independently."

The Appellant contends that the Respondent, herein was not entitled
E to claim the benefit of SS! exemption on the ground that the same would not
apply to the specified goods bearing a brand name of another person, in view
of the fact that the Respondent has been using the brand name of said Hira
Industries Limited.

Further contention of the Appellant is that the said Hira Industries
F Limited being engaged in the manufacture of cement with the brand name of
Hira Cement which demonstrates the financial interrelationship of both the
concerns as belonging to a group of industries, known as Hira Group of
Industries.

Indisputably, I0 show-cause notices were issued by the Superintendent/
G Assistant Commissioner concerned upon the Respondent calling upon it to
show cause as to why the SSI exemption granted to it should not be disallowed
and the duty which was not paid for the period December, 1993 and December,
1997 should not be recovered. In the said proceedings, the Respondent was
held to be not entitled to such exemption.
H
COMMR OF CENTRAL EXCISE. RAIPUR v. HIRA CEMENT [SINHA. J] ] 08 J

However, on an appeal made by the Respondent, by an order dated A
28.12.2001, the Commissioner dropped the proceedings inter alia relying on
or on the basis of a decision of the Tribunal in Emkay Investment Pvt. Ltd.
v. Commissioner, (2000) 124 EL T 741 (Tribunal), holding:

"Thus, I hold that both firms were not using common brand name on
the packings of their products which will disentitle the notice from B
benefit of exemption under Notification 1193-CE dtd. 28.2.93 as amended,
7197-CE dtd. 1.3.97 (Superseded by Notification No. 16197-CE dtd.
1.4.97) and 38197-CE dtd. 27.6.97 etc. by merely alleging that they have
used the brand name of another firm, i.e., Mis. Hira Industries Ltd.,
Jagdalpur. Hence, I find that there is no justification in demand of C
duty of Rs. 49,77,2061- from the noticee for the concerned period
alleged in the Show Cause Notices listed in para-! of this order by
disallowing the benefit of exemption notification No. Notification 1193-
CE dtd. 28.2.93 as amended, 7197-CE dtd. 1.3.97 (superseded by
Notification No. 16197-CE dtd. 1.4.97) and 37197-CE dtd. 27.6.97 etc. to
the Noticee." D
As regard the question that the Respondent and the said Hira Industries
Limited are related persons to each other, it was held that they are separate
juristic persons. An appeal thereagainst was preferred by the Appellant
before the Tribunal and by reason of the impugned judgment, the same was
dismissed. E
The Tribunal upon comparing the logos of both Hira Cement and Hira
Industries Limited observed:

"A perusal of the logo and brand name used by the respondents
clearly reveals that their brand name is "BBC CEMENT'', whereas the F
brand name of Mis. Hira Industries Ltd. is "H!RA CEMENT''. Merely,
because the logo is similar in both the cases, it cannot be alleged by
the Revenue that the respondents are using the brand name of another
person for the purpose of attracting the mischief of para 4 of the
Notification. In the present matter, the Revenue has not established G
that the brand name used by Mis. Hira Industries Ltd. is used by the
Respondents. There is a substantial force in the submissions of the
learned Advocate for the respondents that the words 'Hira Cement'
written on their bags of cement is the name of their company and not
the brand name of Mis. Hira Industries Ltd"
H
1082 SUPREME COURT REPORTS [200611 S.C.R.

A It is not in dispute that the Appellant in its notice dated 20th/22nd May,
1992 mentioned that a proceeding was initiated against the Respondent as
also the said Hira Industries Limited as regard valuation of the goods wherein
ultimately by an order dated 21.9.2001, the Commissioner dropped the
proceedings. It is also not in dispute that in the appeal preferred by the
B Appellant, herein before the Tribunal questioning the order dated 28.12.2001,
the assessee objected to the maintainability of the appeal by filing a cross-
objection before the Tribunal. The Commissioner in its earlier order dated
21.9.2001 opined:

"(d) On comparing the two bags submitted by the two noticees No.
I and 2 which was submitted by them during the course of personal
c hearing on 3.9.2001, it is clear that notice No. l's brand name 'BBC'
was more prominent on their bags whereas in case of bags of noticee
No. 2 brand 'HIRA' with a logo of diamond on top is more prominent.
This fact may be further corroborated with samples and drawings of
HOPE/ Jute bags submitted by noticee No. I to the Assistant Collector
D Central Excise & Customs, Anupam Nagar Raipur under their letter
No. HC: 91-92 dtd. 4.2.92 enclosing the photolopies of the documents.
Hence noticee No. I Mis. Hira Cement (firm> name) have used only
brand name 'BBC' on their products. They have not used Hira Cement
as their brand name which is being alleged in the show cause notice
belongs to noticee No. 2. Noticee No. 2 sold their products with brand
E name 'HIRA CEMENT' with diamond logo/ mark on the top. Brand
name of the both the firms are different. These are not further
substantiated during the course of investigation and facts brought on
the record.

(e) Thus, I hold that both the noticees were not using common brand
F
name on the packings of their product which will disentitle the noticee
No. (I) from benefit of exemption unc!er notification No. 175/86 by
merely alleging that they have used the brand name of noticee No. 2.
Hence, I find that there is no justification in demand of duty of Rs.
326357.75 from noticee No. I for the period 21.6.91 to December, 91 by
G way of disallowing the benefit of exemption notification No. 175/86 CE
to noticee No. I"

However, in the said proceedings, penalties of Rs. 50,000/- and Rs.
25,000 were imposed against the Respondent and the said Hira Industries
Limited, respectively.
H
COMMR. OF CENTRAL EXCISE, RAIPUR v. HIRA CEMENT [SINHA, J.] J 083

An appeal thereagainst was preferred by the Respondent to the extent A
of demand confirmed on the ground of alleged related person under Section
4 of the Act. The said appeal was dismissed, An appeal preferred thereagainst
by the Respondent before this Court was also dismissed. The contention of
the Respondent in the aforementioned situation is that the said order dated
21.9.2001 attained finality and, thus, having been accepted by the Appellant, B
the present appeal was not maintainable.

Mr. G.E. Vahanavati, learned Solicitor General appearing on behalf of the
Appellant would, at the outset, draw our attention to the fact that the decision
of the Tribunal in Emkay Investment (supra) has expressly been reversed by
a 3-Judge Bench of this Court in Commissioner of Central Excise, Calcutta C
v. Emkay Investments (P) ltd. and Anr., [2005] I SCC 526 stating:

"15. We have gone through the common order passed by the Tribunal.
In our view, the Tribunal has erred in not appreciating that to attract
provision of clause 7 of Notification No. 175/86-CE, it is sufficient that
the product contained a trade mark/logo of another ineligible person D
which was fully satisfied in the instant case and whether the product
also contained the brand name/trade name/logo of the manufacturer
would not and cannot alter such position. Likewise, the interpretation
of Explanation VIII as advanced by the Tribunal does not appear to
be correct in law and in fact. It was imperative that by using the E
registered logo "MERINO" belonging to M/s Merinoply and Chemicals
Ltd. on their own product M/s Emkay Investments Ltd. fulfilled the
purpose of indicating a relation between the said pro.ducts and the
logo owner so as to influence the trade and therefore, the provisions
of Explanation VIII were fully satisfied so far as the case ;:m hand was
concerned. The finding of the Tribunal to the contrary, in our opinion, F
is wrong and liable to be set aside."

It was submitted that in that view of the matter the impugned judgment
of the Tribunal and the order of the Commissioner cannot be sustained. As
regard the cross-objection filed by the Respondent, it was urged that the
order of the Commissioner dated 21.9.2001 having a limited effect, the same G
will not debar the Appellant from maintaining an appeal. In any event, the law
having been declared by this Court, the decision of the Commissioner must
< give way to the decision of this Court.

Mr. R. Santhanan, learned counsel appearing on behalf of the
Respondent, on the other hand, would submit that once the said order dated H
1084 SUPREME COi RT REPORTS [200611 S.C.R.

A 21.9.200 I attained finality, the Appellant did not have any locus standi to
maintain an appeal before the Tribunal and consequently this appeal. It was
further contended that a finding of fact has been arrived at by the Commissioner
as also the Tribunal to the effect that it is not the assessee who had been
using the brand name of the said Hira Industries Limited and as if Hira
B Industries Limited was using the brand name of Hira Cement belonging to the
Respondent herein, the assessee cannot be blamed therfor, the impugned
judgments should not be interfered with. Drawing our attention to various
distinctive features in the respective logos of the Respondent as also the said
Hira Industries Limited, the learned counsel urged that the question must be
adverted to keeping in view of the fact that the dispute does not relate to
C trade mark and in that view of the matter if the said Hira lndustrks Limited
had been using the premises belonging to the Respondent as also the
telephones which are installed therein or had been selling ccm..:nt from it, the
same by itself cannot be a ground for holding that the Respondent had been
using the brand name of the said Hira Industries Limi•~d. It was submitted
that in fact the said Hira Industries Limited had been purchasing cem..:nt from
D the Respondent.

The purport and object of grant of exemption t' d SS! unit is clear and
unambiguous. It can be availed of. provided that they >atisfy the conditions
precedent therefor. The criteria for determining the eligibi;ny of an entrepreneur
E for becoming entitled to have the benefit of exemption notification, it is well-
settled, must be construed strictly. (See Tata /run and Steel Cu. Ltd. v. State
of Jharkhand and Ors., (2005] 4 SCC 272 and Government of India & Ors.
v. Indian Tobacco Association, (2005) 6 SCALE 683 ].

In Commissioner ufC. Ex.. Trichy v. Rukmani Pakkwell Traders, (2004)
F (165) ELT 481: [2004) I I sec 801, the expression "such brand name" was ,
considered holding: '

"7. The Tribunal had also held that under the Notification the use
must be of "such brand name". The Tribunal has held that the words
"such brand name" shows that the very same brand name or trade
G name must be used. The Tribunal has held that if there are any
differences then the exemption would not be lost. We are afraid that
in coming to this conclusion the Tribunal has ignored Explanation IX.
Explanation IX makes it clear that the brand name or trade name shall
mean a brand name or trade name (whether registered or not) that is
to say a name or a mark, code number, design number, drawing
H number, symbol, monogram. label. signature or invented word or writing.
COMMR. OF CENTRAL EXCISE, RAIPUR v. HIRA CEMENT [SINHA, J] ] 085

This makes it very clear that even a use of part of a brand name or A
trade name, so long as it indicates a connection in the course of trade
would be sufficient to disentitle the person from getting exemption
under the Notification. In this case admittedly the brand name or trade
name is the words "ARR" with the photograph of the founder of the
group. Merely because the registered trade mark is not entirely B
reproduced does not take the Respondents out of Clause 4 and make
them eligible to the benefit of the Notification."

In Commissioner of Central Excise, Chandigarh-Iv. Mahaan Dairies,
(2004) 166 ELT 23, the same view was reiterated. The views expressed therein
have also been reiterated in Commissioner of Central Excise, Calcutta v. C
Emkay Investments (P) Ltd. and Anr. (supra).

The ratio of the decisions referred to hereinbefore shortly stated is that
if the manufacturer uses some brand of its own, it would be entitled to, but
it would not be, for one reason or the other, it had been using the brand of
another. The learned Commissioner or the learned Tribunal, as noticed supra, D
did not have the occasion to consider the question in the light of the
aforementioned decisions of this Court.

Emkay Investment (supra) which was the basis for the decision of the
Commissioner has expressly been overruled by this Court. The cross-objections
filed by the Respondent, herein before the Tribunal also had not specifically E
been adverted to as the matter relating to maintainability of the appeal preferred
by the Appellant, herein before the Tribunal does not appear to have been
discussed nor any reference thereto has been made in the concluding paragraph
of the judgment.

Before us, the parties have placed the entire facts. We may also place F
on record that it has been conceded before us by the learned counsel appearing
on behalf of the Respondent that the earlier order dated 26. 9.200 I shall not
operate as a res-judicata but, as noticed hereinbefore, the only contention
raised was that once the Revenue accepts a judgment, it cannot raise the said
question once again. G
Although some decisions to this effect have been cited by Mr.
Santhanan, we are of the opinion that the matter should be considered afresh
by the Tribunal upon considering all aspects of the matter. We refrain ourselves
from going into the said question. We may, however, notice that a Bench of
this Court in Government of WB. v. Tarun K. Roy and Ors., [2004] I SCC 347 H
1086 SUPREME COURT REPORTS (2006 J l S.C.R.

A stated:
"Non-filing of an appeal, in any event, would not be a ground for
refusing to consider a matter on its own merits. (See State of
Maharashtra v. Digambar.)

B In State of Bihar v. Ramdeo Yadav, wherein this Court noticed
Debdas Kumar! by holding:

"4. Shri B.B. Singh, the learned counsel for the appellants, contended
that though an appeal against the earlier order of the High Court has
not been filed, since larger public interest is involved in the
c interpretation given by the High Court following its earlier judgment,
the matter requires consideration by this Court. We find force in this
contention. In the similar circumstances, this Court in State of
Maharashtra v. Digambar and in State of W.B. v. Debdas Kumar had
held that though an appeal was not filed against an earlier order, when
public interest is involved in interpretation of law, the Court is entitled
D to go into the question.""

As we intend to remit the matter back to the Tribunal, we should not
make any observation at this juncture which would affect the merit of the
matter one way or the other. We may also be misunderstood. Suffice it to say
that having regard to the definition of the brand name as contained in
E Explanation IX to the notification dated 28.2.1993, the matter requires fresh
consideration by the Tribunal upon taking into consideration the fact of the
matter. If, howe.ver, the Tribunal comes to the conclusion or is of the opinion
that further investigation in facts may be necessary, it may pass such order
or orders as it may think fit and proper.
F
This appeal is allowed and the impugned judgment is set aside and the
matter is remitted to the Tribunal for consideration of the matter afresh in the
light of the observations made hereinbefore. No costs.

D.G. Appeal allowed.